March 2009 Report

Survey Indicators
Seasonally Adjusted

The Empire State Manufacturing Survey indicates that conditions for New York manufacturers deteriorated significantly in March. The general business conditions index fell to a fresh low of -38.2. The new orders and shipments indexes also dropped sharply to new record lows, and the inventories index declined to its lowest level since 2001. The indexes for both prices paid and prices received remained negative for a fourth consecutive month. Employment indexes remained close to their recent lows. Future indexes were somewhat higher than in February, but the six-month outlook continued to be very subdued, with capital spending and technology spending indexes falling to record lows.

In response to a series of supplementary questions (see Supplemental Report tab) on borrowing needs and credit availability (previously asked in the October and March 2008 surveys), more firms reported declines than increases in borrowing needs over the past three months, by a margin of 23 percent to 15 percent. Manufacturers also reported decreased borrowing needs over the past year, on balance, though by a narrower margin. Respondents reporting increased borrowing needs most often cited a decline in business or revenue as the reason—a change from last October’s survey, when capital investment was the reason most commonly given. Respondents did report fairly widespread tightening in credit standards and borrowing costs; these changes have in turn affected both capital spending plans and hiring plans for a greater proportion of firms than in last autumn’s survey.

General Business Conditions Index Reaches a New Low
On the heels of the record low set in February, the general business conditions index in March declined still further, dropping 4 points to -38.2. Just 10 percent of respondents reported that conditions had improved over the month, while 48 percent reported that conditions had worsened. The new orders index plunged 14 points to -44.8, eclipsing the record low set last month. The shipments index also set a record, dropping 19 points to -26.7. The unfilled orders index, at -23.6, remained close to its recent low. The delivery time index, at -12.4, was virtually unchanged from last month. The inventories index fell sharply, to -27.0, with nearly 40 percent of respondents reporting lower inventories in March.

Prices Declines Continue
The indexes for both prices paid and prices received remained negative. The prices paid index was little changed from February, at -14.6; the prices received index fell to -23.6. Employment indexes were also staunchly negative. The index for number of employees hovered near its recent record low, at -38.2, and the average workweek index, although up slightly from last month, remained quite low at -23.6.

Future Outlook Is Little Improved
Future indexes showed continuing weakness, suggesting that the six-month outlook remains subdued. The future general business conditions index turned positive in March, but just barely so, and was very low by historical standards. The index rose 10 points to 3.1. The future new orders and shipments indexes also improved and were modestly positive. The future inventories index drifted downward to -20.2, nearing a record low set in October of last year. The future prices paid index was at zero, while the future prices received index fell several points to -14.6. Future employment indexes rose, but remained below zero. The future capital spending index dropped 8 points to -19.1, a record low, and the technology spending index declined for a sixth consecutive month, reaching a record-low -23.6.